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Richard Verdin on protection

Have you recently thought about the type of professional you really want to be?

This question is both pertinent and current as we move into the final stages of the regulatory sweep-up of product sales, because it will help you decide on the products you want to advise on and the permissions you need.

I say this because I now see huge differences between advising on life, critical illness and income protection products and all other financial services instruments, be they forms of investment or borrowing. It is a difference that in the past caused a number of mortgage advisers (MAs) and IFAs to stay away from pure protection products.

However, the lure of popular products that generate healthy levels of remuneration has been too strong for many to resist, and more and more IFAs and MAs are now advising on these products.

Alongside this shift in practices the skills and experiences needed to manage such transactions have also changed. It is a fact that qualified, authorised individuals need to be involved in any ‘financial’ advice process, but do they really want to be, or indeed should they really be, involved in the process beyond that?

The difference is that during the arrangement of other financial solutions you would never be expected to have to ask a customer about their sexual practices or preferences and the sexual practices of their current and past partners, let alone having to discuss with them their experiences of transmitted diseases or the country of origin of past partners. If you advise on protection you will. If you advise on protection you have to ask your clients about recent changes in their social habits, including their consumption of alcohol and their use of illegal substances. You also have to ask them to detail every visit to their doctor in the past five years for lumps, bumps or aches. You have to question them about their state of mind and whether they have ever had suicidal thoughts.

If you are male and middle aged (and the majority of advisers are both) you may have to ask your young female mortgage customer this: have you ever had or do you currently have any change to your breasts, for example any lump or cyst, rash, discolouration, inverted nipple, bleeding or discharge from a nipple or any other abnormality?

Do you feel competent enough to discuss the answers to such questions with your clients? Do you feel it is appropriate and how do you think your customers feel about this questioning in their home, in your office or at your branch? Do you really think they answer you fully or truthfully, do they really think it is any of your business?

All she wants from you is to buy that flat she has just had an offer accepted on. The flat she is buying with her boyfriend, who is sitting in front of you, with similar feelings of embarrassment, wondering what you are going to ask him.

The level of questioning now pushed out from the underwriter’s desk to the point of sale has grown significantly as a direct result of the emergence of electronic submission and the more detailed medical questioning it is able to support. The benefits of such technology for the insurer are many, not least in that it helps them to satisfy their desire, or need, to segment the population further, helping them to increase their competitiveness and manage their risk.

Should it be the ‘financial’ adviser that is interacting with customers and the technology in such a way? With the medical questions being asked growing in number and complexity, you have to ask yourself, where will it all end?
The answer is it will end in personal catastrophes of course.

When the customer claims and the insurer won’t pay because of non-disclosure. In a non-regulated world the adviser felt some of the effects of this, in the future with regulation and an ombudsman who will be able to consider the contributing influence of the adviser, you may just find yourself paying out a few ‘sums insured’ yourself.


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